US cyber insurance premiums rose 37 percent to $1.84 billion in 2017, according to a report by Aon.
The 2017 US Cyber Insurance Profits and Performance, which provides insight and analysis on cyber insurance, reports that the US cyber insurance market has continued to grow.
A total of 170 US insurers reported writing cyber insurance last year, up from 140 in 2016 and 119 in 2015.
According to the report, 2017 was an ‘unprecedented year’ for ransomware attacks but cyber remained a profitable line of business with industry loss ratios decreasing from 44.6 percent and 32.4 percent, mostly due to a reduction in severity.
There was also a decrease in average claim size, which fell from approximately $91,000 in 2017 to $57,000 in 2017, which the report stated was “riven by a growth in ransomware claims and a shift from standalone policies to package policies”.
The report also revealed that the US cyber market remains relatively concentrated but new entrants are beginning to have a dilutive effect.
In 2017, the top 10 cyber insurers accounted for 69 percent a drop from 73 percent in 2016.
Head of cyber analytics for Aon’s Reinsurance Solutions business, Jon Laux, said the report’s findings are very encouraging for existing players and those looking to enter this line of business.
Laux explained: “It is still early days in the development of the cyber insurance product, yet our study reveals that despite several significant and prolific cyber attacks in 2017, industry premium continued to increase and loss ratios continued to decrease.”
“It shows that insurers have the expertise to offer an appropriate product with first and third party coverages that firms are willing to buy.”
He added: “It also demonstrates that underwriters are structuring and pricing policies in a way that allows them to generate profit.”
“This is a positive outlook which should give cyber insurers the confidence to remain committed to this much-needed line of business.”